Former President of Argentina’s Central Bank Addresses Alumni
Is Argentina Bouncing Back?

During a recent Continuous Education session, Javier González Fraga, former President of the Argentinean Central Bank said, "The best thing that could happen to Argentina is that nobody lend it money for the next 10 years."

González Fraga gave an overview of developments in the Argentinean economy since President Kirchner took office and explained how the country’s economic and financial situation was expected to develop.

The former Central Bank President underlined the fact that the Argentine GDP fell by more than 20 percent in real terms during 2002. During the three preceding years, it had fallen, on average, between 2 percent and 2.5 percent anually.

“In that one year (2002), inflation rose to 41 percent, while it had shown negative rates during previous years. In the meantime, the unemployment rate rose to around 20 percent according to official figures, and poverty took a hold on the country.”

A Vigorous Recovery

González Fraga explained that “during 2003 and the first months of 2004, we have rather surprisingly seen what seems to be a vigorous recovery in the Argentine economy. Real growth in 2003 was around 8 percent, the second highest growth figure in the world after China. And it has not fallen below 6 percent since the beginning of this year.”

At the same time, inflation dropped to 4 percent in 2003, the unemployment rate was reduced by 4 percentage points and the current balance of payments showed a notable surplus, at 7.1 percent. “Despite the uncertainty that lies ahead during the coming months, the hard data is impressive,” he said.

Management Expert Offers Insights
Management Styles of Japan’s Top Companies

According to Japanese business expert Dr. Kimio Kase, all business leaders fall into one of two management styles. Knowing the strengths and weaknesses of their style will help executives successfully ride out critical situations.

Dr. Kase, a professor at Globis Management School in Japan, offered insights into the mentality of Japanese business leaders at a Continuous Education Session that brought together over 50 IESE alumni in Barcelona in May.

Nissan, Shinsei Bank, Yamato Transport, Sony and Shin-Etsu Chemical are five of Japan’s most outstanding companies and household names. Dr. Kase has studied the companies’ management practices in-depth and has identified the factors that made the companies successful, especially during the turbulent ’90s after the bubble economy of the ’80s burst.

Dr. Kase divides Japanese management styles into two mental schemes: the “Proto-Image of the Firm” (PIF) and the “Profit-Arithmetic” (PA). With PIF, decisions are highly influenced by the abstract image that the leader holds of the company; the PA approach is more pragmatic and is motivated by profit and the bottom line.

IESE professor Pedro Nueno, who chaired the event, said that while the American management model remains the gold standard around the world, there is still much to learn from Japan. “Just as Japanese managers were not aware of their own blind spots that preceded their fall, those who think they are invincible must begin to digest these lessons,” he said. Nueno hinted that American and Chinese business leaders are potentially the most susceptible to a Japan-style fall from grace.

Kase underscored this point when he noted that while many faithfully follow the U.S. for setting management trends, he felt that the European and Japanese management models were more universally applicable and sustainable.

Deans, Business Leaders Present Views
The State of European Corporate Governance

Business Leaders Discuss European Corporate Governance Trends

"The board is the very last place where companies globalize," observed Gabriel Hawawini at a recent conference on "Trends and Best Practices In Corporate Governance," held at IESE's Madrid campus.

Hawawini, Dean of INSEAD business school, was one of several experts to speak at the event, which was part of the IESE Continuous Education Program. IESE's Dean Jordi Canals also made a presentation on corporate governance.    

Other speakers included Enrique Aldama, Vice-Chairman of CEOE and Chair of the “Aldama Commission”; and Alfredo Sáenz, CEO of Santander Group.

In his talk titled "New Trends in Corporate Governance in Europe," Profesor Hawawini said that board members cannot afford to be out of sync with the business culture and strategy of today's organizations.  One of the main problems of the companies involved in recent scandals in both Europe and the United States, he said, was that many boards failed to align themselves with global strategies, and thus did not fully adapt to changing situations. Many boards, he added, still have not restructured or adapted to the new global business culture, and as a result they have continued to lose competitive ground. Proof of this, he noted, is that in Europe less than 15% of board members are internationals, and in the United States the number is even lower –where less than 2% of members are internationals.

Jordi Canals demonstrated in his presentation why the trends in corporate governance are not merely the latest fad, but rather represent a fundamental structural change in the field of business administration. He compared the three European traditions (the British, the German and the Spanish) in terms of the legal reforms and decision-making processes of boards of directors. Canals concluded his presentation with some remarks on the great challenges that boards face in the upcoming years with respect to their real contribution to business.

Enrique Aldama commented in his talk "How are European Companies Improving Corporate Governance?" on the current situation of Spanish firms. He observed that practically all of them have complied with his commission's recommendations in terms of transparency, security and responsiveness. 
As a practical example, Alfredo Sáenz explained how Santander Group is implementing its changes.  He highlighted the importance of creating a system adapted to the reality and characteristics of Europe, since from his point of view, the recent legislation in the United States is the result of an overreaction to the numerous business scandals there. He added that this has imposed complicated and costly bureaucracy on the organization of boards, and has caused some firms to seriously question whether or not they should remain registered in the stock market there. 

Sáenz concluded his presentation by pointing out that the most important thing is the quality of the board members themselves, and thus the advice they can give. "In the end, what really counts is people."